Did an all around pad/rotor replacement on the neighbor's 300TD, but have a few quibbles..

Front swap went fine, as expected, but for one thing. I didn't have any of the MB anti-seize grease for the pads but I did have some permatex anti-sieze lube. I applied it to the pad backing and took the car out for the test run. Good to find out that the brakes no longer have that horrible pulsation, but when we came to a stop, a smoke cloud came from the left front wheel. Never had this happen to me before. The brakes stop the car fine, but this is odd. Could it be the Permatex grease making the smoke or maybe just the pads breaking in? I did accidentally drop one of the pads on the gravel drive, so maybe some foreign material is in the pad and has to burn off? Also, I am currently doing the rear brakes, but the rotors are rusted to the hub. I did put some penetrating grease on the rotor center, and lightly tapped the rotor with a mallet, obviously the 5mm allen I took out first thing, but the damn things won't budge! So those of you who have run into this problem before, any help would be much appreciated!